Mexican analysts and bankers were broadly surprised by news the two sides are discussing a deal, since Modelo (>> Grupo Modelo SAB de CV) is tightly controlled by a close-knit group of shareholders and executives have in the past said they are not looking to sell to the Belgian company that already owns 50.4 percent of Modelo.

"It is easy to understand ABI's interest in a deal. It is less obvious what Modelo's motivation would be," said Rafael Shin, analyst at BTG Pactual in New York. This, he added, puts Modelo in a strong negotiating position.

Several analysts noted that Modelo had been seen as a more likely buyer than seller in the latest round of consolidation in the beer industry given its robust financial health.

Modelo, which had total sales of 91.2 billion pesos ($6.53 billion)in 2011, is well capitalized and has low levels of debt.

But InBev, having swallowed its 2008 purchase of Anheuser-Busch, is also well placed to hunt for acquisitions and Modelo's standing as Mexico's No. 1 brewer and maker of the most popular import beer in the United States makes it an attractive target.

While there is no apparent need to sell on Modelo's side, analysts said a generous premium to Modelo's value could whet controlling shareholders' appetites for a sale.

"For every company, there's a price at which they would consider a deal," said Rodrigo Heredia, analyst at brokerage Ve Por Mas in Mexico City.

In a report in May, BTG Pactual analysts said Modelo could command a 30 percent premium and Citigroup analysts in a note on Monday also said a mark-up of that magnitude would be in line with historic average brewing premiums.

That would put a take-out price at almost $15 billion based on Modelo's Friday closing stock price and market capitalization of $22.9 billion.

Modelo's share price jumped almost 20 percent on Monday to 116.87 pesos, indicating the market also expects the Mexican brewer could attract a high price, said Heredia.

Still, it may take more than money to win over Modelo's controlling shareholders, who include some of Mexico's richest executives and relatives of the company's founders.

Modelo shareholders may want a deal that would give them a stake in AB InBev, said Marco Montanez at Vector Casa de Bolsa in Mexico City. That would follow the pattern set by Mexico's no.2 beer business, which Femsa (>> Fomento Economico Mexicano, SAB de CV) sold to Heineken (>> HEINEKEN) in 2010 for a 20 percent stake in the Dutch brewer.

AB InBev is also likely to have to do some sweet talking to Modelo's shareholders, given the somewhat fraught relationship the two companies have had since InBev's 2008 acquisition of Anheuser-Busch.

Anheuser Busch, which has held a stake in Modelo since the 1990s, tried and failed to combine with Modelo to avoid its sale to InBev in 2008. Modelo then fought and lost a two-year arbitration case in which it claimed it was not consulted about InBev's acquisition of Anheuser Busch.

After losing the case, Chief Executive Carlos Fernandez said Modelo would not sell its remaining stake to AB InBev.

In fact, Fernandez told the Wall Street Journal last year Modelo's relationship with AB InBev was just getting going "These are the first stages of getting to know each other," he said.

($1 = 13.9587 Mexican pesos)

(Reporting by Elinor Comlay; Editing by Bernard Orr)

By Elinor Comlay